When you are a small company, signing a big, name-brand company may be a dream come true. Not only do big companies have bigger budgets than their smaller counterparts, but they add tremendous credibility and appeal to a small business’s client roster, potentially leading to more business.


However, this entrepreneurial dream can turn into a nightmare for businesses who aren’t well-versed in the work process of bigger corporations. Here are some of the issues to be prepared for before you solicit and agree to work with a big corporate client.


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Lengthy and Detailed Vetting and Sell-cycle



First, it can take a long time to get through a big company’s approval process. There are many managers who may require approval, budget cycles to align with and more.


And just when you think you are finished, you’ve only just begun!


Second, major corporations are quite careful about protecting their reputations, so many have a thorough vetting process for each vendor to ensure they are not associated with any business that could become a public relations problem for them down the road.


Be prepared for a vetting that seems like a cross between the Spanish Inquisition and a TSA extended pat-down. This may include giving up sensitive information about your best clients, your revenue, how much your top clients account for in terms of revenue and even background on the executives.


Third, many big businesses outsource this vetting to a third-party provider who may ask things that seem irrelevant to your business or the scope of your proposed work with the company, but are just part of the process.


Crazy Contract Terms


Big company legal departments like to earn their keep and that often shows up in standardized, but somewhat insane, legal agreements and policies. This can range from required non-disclosure agreements to travel and ethics policies and more.


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When you work with small and mid-size businesses, you may be able to negotiate certain aspects of these agreements or get workarounds for key terms, but it is very difficult to do the same with larger entities.


I have seen contracts that ask for industry exclusivity for relatively small value contracts and others that ask for full name and likeness rights and even those that prohibit entrepreneurs from making political donations. Read these contracts carefully, then consult with a lawyer and make sure that you not only understand what you are agreeing to, but that it’s worth what you are gaining from the relationship.


Extra Insurance Requirements


Many big businesses require your business to carry all kinds of supplemental insurance at certain levels. Some of the types of insurance you may be required to carry include general liability, commercial auto, employer’s liability, worker’s compensation and professional liability/errors and omissions insurance.


This can become frustrating for multiple reasons. First, the type of insurance required may not even be relevant to your business or the engagement at hand, but because it’s a company policy, you still haveto spend additional – and not insignificant – money for no reason other than it’s a policy and a cost of obtaining the business.

Second, many insurance companies that service small business don’t carry all of the types of insurance you are required by your client to carry or they may not carry the coverage at the levels required by the client. You can work with a broker to piece together the coverage you need or you can seek to get an exemption.


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Slow Pay


Big companies are good at managing cash flow, which means you need to be good at managing yours as well, because they often take anywhere from 30 to 90 days to pay. Some even have a non-negotiable discount if they pay you within a reasonable amount of time, so you need to factor that in when you set your payment terms.


You may also consider asking for a retainer up front and/or payment staged at milestones as a method of ensuring that your own cash flow doesn’t suffer while you provide services.


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Big Corporate Politics


The final issue to be prepared for is the challenges of navigating internal politics. As mentioned above, corporate structures can impact initial sales cycles, but sometimes, even when you are entrenched and continuing to work with the big company, it can remain an issue.


This can be exacerbated by frequent turnover in key departments or having to work with different departments who may have ownership of different facets of the goods and services you are providing. The best advice here is to be patient but persistent and never become complacent. Red tape can be frustrating, but do what you can to be your own advocate.


Big companies can truly help a small business enter the big leagues, but they can also be a big pain in the backside. Your expectations and preparation can help soothe that pain so you see more benefit for your efforts.


About Carol Roth

Carol Roth Headshot for post.png

Carol Roth is the creator of the Future File ® legacy planning system, “recovering” investment banker, billion-dollar dealmaker, investor, entrepreneur, national media personality and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett-produced technology competition show, America’s Greatest Makers and TV host and contributor, including host of Microsoft’s Office Small Business Academy. She is also an advisor to companies ranging from startups to major multi-national corporations and has an action figure made in her own likeness.


Web: www.CarolRoth.com or Twitter: @CarolJSRoth.

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